Uma Prasad Singh vs Babu Shivakant Prasad Singh and Others

Wort, J.—This is an appeal by the defendant in an action in which the plaintiffs claimed sums which had been paid by them for revenue and for public demands with regard to an estate which had been partitioned between the parties in the year 1931. The defendant admitted the claim but by way of defence stated that sums had been collected by the plaintiffs being rent with regard to the same estate and also decrees realized to which, in the circum. stances, the defendant claimed to be entitled. That a portion of the rent or whole of it, the subject-matter of the so-called set off, and the money realized under the decrees were those of the defendant is not disputed. The real question is whether in the circumstances of the case the set-off is barred by limitation. The matter can be shortly stated thus: had the defendant''s claim been the subject of a separate action, it would have been barred by limitation. I make that general statement so as to avoid any confusion as to whether a part or whole of the claim would be barred by limitation. The learned Judge in the Court below had held that it was so barred and that therefore the plaintiffs were entitled to the full amount claimed together with interest.

It is contended by the learned advocate appearing on behalf of the defendant, appellant that the Limitation Act does not apply to a case of set-off, alternatively that this was by way of an equitable set-off (what-ever that may mean), and therefore in this particular case, there was no bar of limitation. In my judgment that contention cannot be acceded to for a moment. Set-off is a creature of statute and so far as India is concerned, it is governed by Order 8, Rule 6, although the latter part of the Rule indicates that there may be a set-off other than that provided by the Rule. But with regard to the general proposition that set-off is a creature of statute, there can be no dispute. It is not known to the Common law, nor eo nomine to the rules of equity. The earliest case dealing with this matter is the case in Remington v. Stevens 2 stra 1271. That has always been taken to be the law in England, and in my judgment that is the law in India. Sir Dinshaw Mulla in his book on the CPC observes that

the amount claimed by way of set-off under this Rule must be legally recoverable. It follows from this that if the defendant''s claim is barred by the law of limitation at the date of the suit, it cannot be pleaded by way of set-off under this Rule: Mulla''s CPC Edn. 10,at p. 577.

His authority for that proposition is the well-known case in Walker v. Clements (1850) 15 Q.B. 1046. There are oases, both in the English books and in India, which are relied upon for a different view. Motan Mal v. Mohammad Bakhsh A.I.R (1922). Lah. 254 is the clearest authority in favour of the contention to be found in India. But it will be observed when analyzing the case that it is not an authority for the proposition put forward, as the case in substance is a case of accounts between mortgagor and mortgagee. The English case relied upon is the case in Edmunds v. Waugh (1865) 1 Eq 418. That was not a case of a claim which could have been made the subject-matter of a suit by the defendant against the plaintiff. It was a petition in an administration action in which a sum of �250 had been paid into Court for the contingent liability of the plaintiff in the administration action with regard to a mortgage of which the person whose estate was being administered was a mortgagee. The mortgagor either just before or during the pendency of the administration action had become bankrupt. No interest had been paid by the mortgagor and the question was whether the sum of �250 should be paid to the Official Receiver of the mortgagor''s estate, and whether �250 could legally be reduced by the trustees on account of interest due by the mortgagor to the mortgagee. Interest had not been paid for over 20 years, and the question was whether in the accounting there should be deducted from the �250 the amount of interest due by the estate of the bankrupt mortgagor, and it was held that it could be. The learned Judges in that case were construing Section 42 of statute 3 and 4, Wm. IV, c. 27 and made this observation:

The intention of the Legislature, I think, was that if a man chose to let interest run into arrear for more than Six years, and then come to a Court of justice to recover the interest, he should only be entitled to recover six years'' interest; but it does not follow that the Legislature intended that a mortgagor who has lost his legal right, and comes to the Court insisting on his equity to redeem, should be allowed although he has failed to pay the interest which he ought to have paid for more than six years to redeem on payment only of six years'' interest.

It is no authority for the proposition contended for, nor is the case in In re Marschfield (1885) 34 Ch. D 721, which raised a similar question and in which the decision in Edmunds v. Waugh (1865) 1 Eq. 418 was followed. I have already stated the rule laid down by Sir Dinshaw Mulla, and it seems to me that the only case that has to be met by the respondent is the decision of Adami and Sen, JJ., in Nathan Prasad v. Kali Prasad A.I.R (1926) Pat. 77. There again, it was an accounting between the mortgagor and the mortgagee, and Adami, J. in the course of his judgment observed:

The learned Subordinate Judge was clearly mistaken in holding that the set-off of the rent of the years 1320 to 1323, inclusive, was barred by limitation,

and relied upon the decision in Sheo Saran Singh v. Mahabir Parshad (1905) 32 Cal. 576 for that proposition. The defendant there -who was the mortgagee and who was in arrear as regards certain sum described as haq ajiri under the ijara deed claimed to set off sums which he had already paid to the plaintiff. It may be that had the claim not been put forward in that form, it would have been or could have been the subject-matter of a separate suit. But in the accounts between the parties the defendant merely stated that the sum which the plaintiff was claiming could legally be reduced by the sums which were paid by the defendant to the plaintiff in the circumstances. In my judgment it is not an authority for contending that limitation is not a bar to set off.

It was suggested during the course of the case that limitation was not a bar to set-off if the transactions which were the subject-matter of the claim or subject-matter of the set-off were with regard to the same estate. That, in my judgment, is not a correct way of putting the case. It may very well be, and I think there are some indications in the case to which I have referred, that the bar of limitation does not apply when the question is an account between the parties with regard to the same transaction. The question whether the transaction was with regard to the same estate is, in my judgment, immaterial. Another matter was raised with regard to interest. The learned Judge in the Court below has allowed interest to the plaintiff apart from interest from the date of the decree. In my judgment there are no grounds upon which such a claim could be made or allowed, and therefore the decree of the learned Judge in the Court below must be modified to the extent of disallowing the interest claimed apart from interest from the date of the decree. With this modification, the appeal is dismissed with costs in proportion to the'' success of the parties. Application for leave to appeal is rejected.